“It’s a powerful strategic fit, aligning with Xero’s 3×3 strategy and it brings Melio’s world-class team and platform to Xero,” Xero said.

“This will drive compelling value creation for the US business and the group globally.”

Xero is listed on the ASX, having ditched its NZX listing in 2018.

The company said the upfront consideration will be funded through a combination of a fully underwritten A$1.85b (US$1.2b) institutional placement, US$0.36b of Xero scrip issued to existing Melio shareholders, a fully underwritten US$0.4b unsecured revolving credit facility, and US$0.6b of existing cash on Xero’s balance sheet.

Xero chief executive Sukhinder Singh Cassidy said Melio is a leading, high-growth US business-to-business payments platform that strongly aligns with Xero’s strategy and US growth ambitions.

“Adding Melio’s world-class team, technology platform, and innovative accounts payable solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform,” she said.

“Xero and Melio are highly complementary — together they complete the key jobs to be done for US SMBs, extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers.“

Xero shares last traded on the ASX at A$194.21.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.